Pages

Thursday, December 5, 2013

Seeking Alpha: My Fears About Titan Machinery Seem To Be Coming True

Titan Machinery (TITN)
is showing why investors do well to be cautious about debt-fueled
roll-up stories, particularly in cyclical markets where many of the
major demand factors are out of anybody's control. As cash receipts for
farmers are looking shakier and farmland values are starting to retreat,
the outlook for ag equipment demand in 2014 is getting shakier.
Unfortunately, Titan operates a model that requires merchandise to keep
moving, as interest expense is nearly 10% of gross profits.

With
another disappointment comes another downward revision and, I would
assume, another round of price target cuts on the sell-side. While Titan
had a lot of enthusiastic cheerleaders on the sell-side making "things
aren't so bad" and "things will get better" calls not so long ago,
sentiment has turned more negative. Even though I have a natural streak
of contrariety that encourages me to swim against the tide, I'd be
careful in approaching this name as an ag cycle that definitely
outperformed to the up-side could very well also go lower than expected
on the down-side.

No comments:

Search This Blog

About Me

I started this blog as a way of archiving my writing for sites like Investopedia, as well as posting some thoughts on the markets, stocks, or whatever else strikes my fancy.
Feel free to email me.
You can reach me at tuonela (dot) fool (at) gmail (dot) com

Get My Articles Delivered By Email

Followers

Subscribe To

Disclaimer

This blog represents the opinions and views of its author.

Information is taken from sources believed to be reliable but no warranty or guarantee is made with respect to accuracy.

Investing involves risk and requires proper due diligence. In no way should a reader should presume this blog represents personalized financial advice or is a substitute for proper due diligence. The author expects you to be enough of a grown-up to realize this.